U.S. 30-Year Mortgage Rates Increase to 4.28%

By Prashant Gopal -
Feb 13, 2014

U.S. mortgage rates for 30-year
loans increased for the first time in six weeks as the two-year-old housing recovery showed signs of slowing.

The average rate for a 30-year fixed mortgage was 4.28
percent this week, up from 4.23 percent, Freddie Mac said today.
The average 15-year rate held at 3.33 percent, the McLean,
Virginia-based mortgage-finance company said.

While job growth and tight inventories have bolstered the
housing recovery, prices have climbed faster than incomes,
putting real estate out of reach for some buyers. An
affordability index by the National Association of Realtors -- a
gauge of median prices, family incomes and mortgage rates --
fell last year from a record high in 2012. In the fourth
quarter, single-family home prices rose from a year earlier in
73 percent of U.S. cities, down from 88 percent in the previous
three months, the Realtors group said this week.

“As demand pulls back, I expect a reduction in price
gains,” Lindsey Piegza, the Chicago-based chief economist for
Sterne, Agee & Leech Inc., said in an interview yesterday.
“We’ve simply reverted to the underlying modest trend, which is
a best-case scenario. It allows the housing market to slowly
recover and minimizes the chance of a housing bubble.”

A jump in mortgage rates from near-record lows in May has
contributed to cooling demand. While the 30-year rate has
retreated from a two-year high of 4.58 percent in August,
borrowing costs are poised to increase as the Federal Reserve
trims bond purchases that had pushed down rates.

Janet Yellen, who took over as chairman of the central bank
this month, pledged this week to maintain her predecessor Ben S.
Bernanke’s policies by scaling back the stimulus in “measured
steps.”